On August 24, ZJ INNOLIGHT fell 3.95% in regular trading, trading at 1106.0 HKD/share, with turnover of HKD 119 million. The decline was driven by two key concerns despite a strong interim report: a significant divergence between operating cash flow and net profit, and persistent fears over potential US restrictions on Chinese optical modules.

The company released its half-year results showing revenue of RMB 417.78 billion (up 182.49% YoY) and net profit of RMB 136.51 billion (up 241.70% YoY). However, operating cash flow for the period was only RMB 18 billion, down 44.08% YoY, creating a gap of over RMB 118 billion versus net profit. Management attributed this to aggressive advance procurement of raw materials to meet surging downstream demand for 800G and 1.6T optical modules.

Additionally, reports that the US FCC is drafting measures to restrict Chinese next-generation data center optical modules from entering the US market continue to pressure valuation. With overseas revenue accounting for over 90% of total sales, geopolitical policy uncertainty remains a significant overhang despite the company confirming that 2027 order demand for 1.6T and 800G products continues to grow rapidly.

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